The blast hit the building - in a busy shopping street in the mainly Turkish district - at about 1600 local time (1400 GMT).

Several shops and cars in the street were damaged. Thousands of nails were found at the scene.

"Considering the current evidence, it was a nail bomb," Mr Goebel said.

The shops closest to the blast were reportedly a pizzeria and hairdressers' salon.

The wounded are being treated in hospital. They include a critically injured man who was standing in front of the pizzeria at the time of the explosion, AP news agency quoted a fire department spokesman as saying.

Police have sealed off the area around the blast site and are reportedly sweeping the area for suspects.

The motive for the attack is unclear. The street is in a largely Turkish area of Cologne and the talk locally is that it may have been the result of business or gangland rivalries, says the BBC's Ray Furlong in Berlin.

But there is also speculation of political motives, and the police are not ruling anything out for now, our correspondent says.